Recently published research from Business Monitor International, "Iraq Infrastructure Report Q3 2013", is now available at Fast Market Research

Boston, MA -- (SBWire) -- 08/08/2013 --Although the Iraqi construction sector is expected to benefit from a sizeable investment plan and an inflated budget, the worrying business environment will prevent the sector from growing to its full potential. Low completion rates are a result of government agencies' lack of accountability, as well as frequent delays in the approval of projects and the transfer of funds by the central government pose significant risks to construction sector growth in the country. We accordingly forecast sector growth to be limited at a modest 7.4% year-on-year (y-o-y) in real terms between 2013 and 2017 - far from the impressive 24% y-o-y growth witnessed between 2008 and 2012.

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Although much-delayed, the Iraqi parliament approved in a budget for 2013 back in March. The budget outlines an 18.0% increase in spending compared to 2012, with investment expenditure increasing 49.0% yo- y - making up 40.0% of the total - while current expenditure will increase 4.4%. Of this, we see development spending increasing 28.0%.

The Ministry of Finance and the Ministry of Planning are looking to tackle the issue of low execution rates by making those with a rate of less than 25.0% liable for questioning by the parliament and the council of ministries. While such moves are encouraging for the construction sector, we believe the government's lack of control over local agencies and bureaucratic bottlenecks will impede the progress of development projects during the forecast period.

Despite lower growth estimates, the potential is definitely to the upside. Areas that show upside potential are as follows:

- Transport: Every aspect of the country's transport infrastructure is in need of investment, as demand for air, port, road and rail capacity increases. Of these, railways have received special attention, with two projects announced so far. In 2010, a US$600mn monorail contract was awarded to a TransGlobim International, a Canadian consortium, for design, finance, construction and operation in Najaf for a 30-year concession period. As recently as February 2013, the Governor of Baghdad, Dr Salah Abdul-Razzaq. signed a US$40m agreement for Alstom to undertake detailed design studies for the first phase of an elevated metro to be built in the city.

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